' MIAN HAMID FAROOQ, J.---Messrs Al-Madan Coal Company (Pvt.) Ltd. And two others, the petitioners, seek leave to appeal against judgment and decree dated 31-5-2004, whereby the learned Division Bench of the Lahore High Court at Lahore dismissed their appeal R.F.A. No,403 of 1999.
2. Facts of the case tabulated in the impugned judgment are reproduced below:-- "(2) Briefly stated the facts of the case are that appellant No,1, applied for the financial assistance to the respondent/Bank, which was allowed under the sanction advise dated 18-1-1994 and through the financial agreement dated 7-7-1994, duly executed between the Bank and the borrower, the facility amounting to Rs,7.5 million under LMM scheme, was duly provided to the said appellant; the appellants Nos.2 and 3, who are the Chief Executive and the Director respectively of the appellant No,1, duly executed certain documents, including registered floating charge over the property of the appellant No,1; the pro note and also created equitable mortgage of the immovable properties.
(3) In view of the nature of the facility, appellant No,1, further entered into a contract with Messrs Classic Engineering (Pvt.) Ltd, who was to supply the machinery for the project of the said appellant and the payment of the price on account of the above to the seller was directly to be made by the respondent/Bank, out of the said facility. On the specific request of the appellant No,1, showing full satisfaction about the quantum and quality of the machinery supplied to it, the Bank has disbursed the amount to Messrs Classic Engineering (Pvt.) Ltd. Subsequently, as the liability was not discharged by the appellants, the respondent/ Bank was constrained to file the suit for recovery before the Banking Court at Lahore. The appellants filed their application for leave to appear and defend, in which, they evasively denied their obligation, to repay the suit amount.
(4) It may be pertinent to state here that prior to the institution of the above suit, the appellants had also filed a Civil Suit bearing No,235 of 1997, before the learned Banking Court, challenging the aforementioned finance agreement and also the documents executed by them for securing the facility, imputing those to be the result of fraud and misrepresentation. The suit was dismissed by the Court on 6-6-1997, against which, the appellants preferred a writ petition, which as has been appraised by the learned counsel for the respondent/Bank, the factum not denied by the appellants' counsel, also stands dismissed for the non-prosecution."
' The learned Judge, Banking Court heard the learned counsel for the parties and after finding that the petitioners failed to make out plausible defence sufficient to grant leave to defend the suit to them proceeded to dismiss their leave application and simultaneously, in view of documents on record, decreed respondent-Corporation's suit (for recovery of Rs,15,101,219), against the defendants, jointly and severally with costs together with markup at the stipulated rate from the date of the suit till the recovery of the entire decretal amount, vide judgment and decree dated 19- 4-1999. The petitioners challenged the Saudi judgment and decree through filing an appeal R.F.A.
No,403 of 1999 which was, however, dismissed by the learned Division Bench of the Lahore High Court at Lahore, vide impugned judgment dated 31-5-2004, hence the present petition.
3. Learned counsel for the petitioners, while referring to the contents of the plaint, vehemently contended that the respondent-Corporation failed to plead in the plaint that petitioner No,1 actually received the requisite machinery and that the payment was made to the manufacturers after the note of satisfaction by the petitioners regarding the quality and quantity of the machinery, therefore, the petitioners were entitled for grant of unconditional leave to defend the suit. He further submitted that the petitioners were condemned unheard, as their application for leave to defend was illegally dismissed and they were not allowed to defend the suit and thus both the Courts committed legal error. He referred to page 61 of the paper book to contend that the respondent- Corporation at the time of sanctioning the financial facility obtained blank documents/papers from the petitioners under undue influence and financial duress, thus the documents placed on record by the respondent-Corporation and relied upon by both the Courts are of no legal value/consequence. On the other hand, learned counsel for the respondent-Corporation submitted that in para.4 of the plaint, it was specifically stated that LLM finance facility of Rs,7.500 million was sanctioned, vide letter dated 18-1-1994, on the basis of LMM Finance Agreement dated 7-7-1994 and thus the contents of said two documents are to be read as part of the said para. He added that all the documents executed by the petitioners were duly described in the said para., which are self-explanatory. The learned counsel referred to various documents/ letters on record to state that 'it was on the asking and request of the petitioners that payment was made to the manufacturers as they showed complete satisfaction over the quality, quantity and performance of the machinery. His further contention is that page 61 of the paper book, referred to by the learned counsel for the petitioners, is a manufactured document and is not one of the documents produced by the petitioners in support of the plaint.
4. We have heard the learned counsel for the parties and examined the available record. It is true that it was not specifically stated in the plaint that the requisite machinery was delivered to the petitioners by the manufacturers, but it is equally true that it has clearly been mentioned in para.4 of the plaint that the finance facility was sanctioned under LMM scheme and in addition to other documents finance agreement dated 7-7-1994 was also executed. Moreover, all the documents executed by the petitioners were elaborately detailed in said para. Of the plaint, which reads as under:-- "(4) That on request of the defendants, the plaintiff allowed to defendants an LMM finance facility of Rs,7.500 million for the purchase of locally manufactured machinery (LMM) vide Sanction letter dated 18-1-1994 and LMM Finance Agreement dated 7-7-1994. The defendant company agreed to purchase the machinery from the plaintiff at the marked up price of Rs,14,884,000. The defendants secured the repayment of the finances by executing and delivering to the plaintiff Bank the following documents:-
(1) Agreement for Finance LMM dated 7-7-1994.
(2) Hypothecation Agreement dated 7-7-1994.
(3) Deed of Floating Charge dated 7-7-1994.
(4) Agreement to create mortgage on further assets dated 7-7-1994.
(5) D.P. Note dated 7-7-1994.
(6) Letter of Revival and Continuity dated 7-7-1994.
(7) Memorandum of Deposit of Title Deeds dated 7-7-1994 by defendants Nos.2 and 3.
(8) Memorandum of Deposit of Title Deeds dated 7-7-1994 by defendant No,2.
(9) Memorandum of Deposit of Title Deeds dated 27-9-1994 by defendant No,2.
(10) Guarantee dated 7-7-1994.
(11) Irrevocable General Power of Attorney dated 7-7-1994.
(12) Irrevocable General Power of Attorney dated 27-9-1994.
' Defendants Nos.2 and 3 in terms of the personal guarantees are jointly and severally responsible for the repayment of the said Finance."
' All the documents are to be read as part of the plaint and the contents whereof could not be read in isolation. The finance agreement dated 7-7-1994 executed between petitioner No,1 and the respondent-Corporation, which is considered to be the backbone of plaintiff's case, unequivocally provides that the finance facility is being provided to the petitioner No,1 under the LMM scheme.
Therefore, all the terms and conditions of the said agreement and the sanctioned letter shall be read in conjunction with the paras. Of the plaint and thus it cannot be argued that the plaintiff did not disclose that machinery was provided to the petitioners by the manufactures/suppliers. More importantly, the learned counsel for the respondent-Corporation has rightly referred to letters dated 24-12-1994, 12-6-1995 and 11-10-1995, execution whereof was not denied at any stage, to demonstrate that the petitioners did receive the machinery and the payment was made to the manufacture on their consistent demands. A perusal of the said letters amply manifests that petitioner No,1, at different occasions, through the afore-noted communications, admitted that the financial assistance to the extent of Rs,7.500 million was sanctioned in favour of the petitioners and informed the Corporation that the suppliers/manufacturers have supplied the machinery approved by RDFC, the same had been installed, the work was completed and the machinery was in accordance with the sanctioned facility, inasmuch as, it was requested by the petitioners to the respondent-Corporation that the machinery be inspected and payment may be made to the manufacturers. In view of the categorical admissions on the part of the petitioners', it can safely be observed that the petitioners showed their complete satisfaction over the quality, quantity, working, installation and brand of machinery and also that the petitioners requested the respondent- Corporation to make the payment to the manufacturers.
5. The learned High Court after adverting to every aspect of the case and in view of the documents placed on record, particularly the letters written by the petitioners on the Letterhead of petitioner No,1, rightly came to the conclusion that payment was made to Messrs Classic Engineering (Pvt.)
Ltd., in view of the agreement between petitioner No,1 and Messrs Classic Engineering (Pvt.) Ltd. And only when the petitioner No,2 not only showed his complete satisfaction about the supply, quantity and brand of the machinery, but also requested the respondent-Corporation to make payment to the suppliers. It is not the case of the petitioners that no payment was made to Messrs Classic Engineering (Pvt.) Ltd. Rather, it has been established on record that respondent-Corporation paid various amounts of Messrs Classic Engineering Pvt. Ltd., through different cheques. It has rightly been noted by the learned High Court that petitioners did not complain about alleged non supply of machinery and it was for the first time asserted in reply to the legal notice, issued to the petitioners, that the requisite machinery was not supplied. Had the machinery been not supplied, the petitioners instead of writing the afore-noted letters, showing complete satisfaction over the supply of the machinery, could have easily informed the Corporation from the very beginning that machinery has not been supplied. It appears appropriate to reproduce para.5 of the judgment, which clinched the matter and in fact is answer to the contention raised by learned counsel:-- "(5) Except the evasive denial, Mr. Asghar Hameed Bhutta, the learned counsel for the appellant has failed to explain, as to why the above letters be adjudged as fake and fabricated, when those are on the letterhead of the appellant No,1, the signature of appellant No,2, on the admitted documents such as finance agreement, etc on visual inspection tally with those on these letters.
Moreover, it has not been denied if the letter dated 16-8-1994, is not in the handwriting of the said appellant.
' Further when questioned, he has not been able to show if before the reply to the legal notices, issued by the respondents to the appellants, it was ever complained to the respondent/Bank that the machinery has not been supplied by Messrs Classic Engineering (Pvt.) Ltd. Or there is any deficiency or defect in the supply and therefore, no payment should be made to the supplier. To our mind, it seems to be a clear case of misstatement and the defence set out in the leave application is evasive, illusionary and improbable and perhaps has been set out just to delay and prolong the matter, otherwise, no substantial questions of law or fact, has been raised. In such circumstances, we do not find any error in the judgment of the learned. Court below, which for the additional reason herein stated, is hereby upheld, resultantly, the appeal is dismissed."
6. As regards execution of the charge documents, the petitioners nowhere denied execution of the documents inasmuch as, they did not urge before the learned High Court that they did not execute the documents, rather the only contention raised before the learned High Court was that Messrs Classic Engineering Private Limited never supplied the machinery to the petition No,1, therefore, they are not bound to pay any such amount. We found from the memorandum of appeal R.F.A. No,403 of 1999, filed by the petitioners before the learned High Court, that it has specifically been pleaded in para.5 that petitioner No,1 executed the documents as required by the respondents. It appears appropriate to reproduce para.5 which reads as under:-- "(5) That on the execution of all the documents so required by the respondents, the appellants waited for the supply of the machinery but no positive response was coming forth from the respondents."
' Additionally, the learned High Court in the impugned judgment has held that the petitioners did not deny execution of finance agreement, the floating charge, the pro note and the documents pertaining to the creation of equitable mortgage. When the petitioners did not dispute execution of the majority of the documents and as a matter of fact admitted the correctness of the documents, on the basis of which charge was created and liability was fixed, then how can they avoid the liquidation of liability created through said documents.
7. As regards the plea of learned counsel regarding blank documents, suffice it to say that the said contention is devoid of any force on various counts:-- "Firstly; there is no proof on record to show that in fact the respondent-Corporation obtained blank documents from the petitioners at any point of time.
' Secondly; the list of documents, pointed out by the learned counsel at page 61 of the paper book, was not produced by the respondent-Corporation along with the documents produced with the plaint and we are of the view that the said piece of paper was not the part of the record.
' Thirdly; admittedly the suit was filed under the Banking Companies (Recovery of Loans, Advances Credits and Finances) Act, 1997 (Act No,XV of 1997), which was enforced on 2nd of February, 1997, and the entire proceedings in the suit were undertaken by the Banking Court under the provisions of said Act. Section 17 of Act No,XV of 1997, provides that no Bank shall obtain the signatures of a borrower on blank documents and if any such document was executed prior to the coming into force of the Act, those would not be invalid. Section 17 of the Act reads as under:-- "(1) No Bank shall obtain the signatures of a borrower or customer on Banking documents which contain blanks in respect of important particulars including the date, the amount or period of time in question.
(2) ..........................................................................................................................
(3) Nothing contained in subsections 1 and 2 shall invalidate any document executed prior to the coming into force of this Act.
(4) ..
' All the documents mentioned in the plaint and reproduced in para.4 of judgment in hand were, statedly, executed in the year, 1994 i,e, before the coming, into force of Act No,XV of 1997, which was promulgated on 2-2-1997. Thus, even if, as per the contention of learned counsel, any document was executed/signed, when it was blank, all such documents are protected and valid under section 17(3) of Act No,XV of 1997.
' Fourthly; although learned counsel of the Corporation clearly denied having obtained any blank documents from the petitioners, yet assuming as per the submission of the learned counsel, that certain documents were obtained or got signed from the petitioners, when those were blank, the petitioners in view of section 20 read with section 118 of the Negotiable Instruments Act were estopped to challenge legality, correctness and enforceability of the said documents. If any judgment is needed, the cases reported as Muhammad Arshad v. Citibank N.A. 2005 CLD 1237, Al- Hadayat Textiles v. State Bank of Pakistan, .2004 CLD 435 and Muhammad Arshad v. Citibank N.A.
2006 CKD 1011 can be referred to. This Court in the case of Muhammad Arshad ibid 2006 CLD 1011, after taking into consideration sections 20 and 118 of the Negotiable Instruments Act, held that no benefit could be given to the petitioner on the ground that agreement was not completely filled in, when executed. It appears appropriate to reproduce the relevant portion of para.4 of the said judgment, which reads as under:-- "It is well-settled by now that "Negotiable Instruments Act provides that where one person signs and delivers to another paper stamped in accordance with law, either wholly blank or having written thereon incomplete negotiable instrument, in order that it may be made, or completed into negotiable instrument, he thereby gives prima facie authority to person who receives that paper to make or complete it as case may be into negotiable instrument for any amount. Furthermore, section 118 of Negotiable Instrument Act, provides that presumptions are attached to negotiable instrument, which, inter alia includes that negotiable instrument was made or drawn for consideration and that every instrument bearing date was made or drawn on such date. Held: Documents were given blank as canvassed by appellants even then appellants are estopped to challenge legality, validity and genuineness of said documents. M.P.R.M. Irulandi Mudaliar v. Syed Ibrahim AIR 1962 Mad. 326; National Bank of Pakistan v. Azizullah Hassan 1984 M LD 1035; Messrs Mach Knitters (Pvt.) Ltd. v. ABP 2004 CLD 535, Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation PLD 1971 SC 550; United Bank v. Business Investment Ltd. 1982 CLC 1101; Karim v. Zikar Abdullah 1973 SCM R 100." and ' Lastly; on the basis of said documents, the finance facility was sanctioned, requisite machinery was supplied to the petitioners, which was installed at petitioners' premises and the payments were made to the supplier/manufacture at the request of the petitioners.
' The petitioners cannot be allowed to blow hot and cold in the same breath on the one hand they secured the machinery and asked the Corporation to make payment to the supplier and when the respondent-Corporation demanded the outstanding liabilities they opted to deny execution of the documents.
8. Both the learned Courts after attending to all the crucial aspects of the case, adhering to the contentions raised by the petitioners and upon examination of the documents placed on record legally came to the conclusion that the defence set up in petitioners application for leave to defend the suit was evasive, improbable and no substantial questions of law or facts were raised in the leave application and rightly rejected the same. We are not persuaded to reverse the findings of two Courts which are apt to facts of the case and law on the subject.
9. In view of the above, the present petition, being devoid of merits, stands dismissed and leave to appeal is refused.